Taiwan's HTC mobile phone is on display in a popular computer market in Taipei, Taiwan, Wednesday, March 3, 2010. As Apple Inc.'s iPhone faces stiffer competition in the lucrative market for smart phones, the company is going after one of its main rivals,Taiwan's HTC, with patent lawsuits claiming theft of touch screen technology and other features. less

Taiwan's HTC mobile phone is on display in a popular computer market in Taipei, Taiwan, Wednesday, March 3, 2010. As Apple Inc.'s iPhone faces stiffer competition in the lucrative market for smart phones, the ... more

Photo: Wally Santana, AP

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Patents' growing role in battle of mobile

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Apple's patent lawsuit last week against Taiwanese smart phone manufacturer HTC was just one complaint aimed at a rival trying to outdo the iPhone.

But the case shines a new light on the growing use of technology patents to mark turf and battle competitors in the fast-growing field of mobile.

Experts are unclear on Apple's ultimate intent in suing HTC, whether it's to explicitly stamp out what it calls theft by HTC or to sound a warning to the entire smart phone industry - including newfound rival Google - that it could be coming for them next. But analysts and observers agree that intellectual property litigation in this arena is heating up, and consumers could eventually be affected by the growing friction.

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"I'm seeing more, larger patent cases in the last couple years," said Paul Andre, a partner with law firm King & Spaulding. "It does appear that companies that were more hesitant to file lawsuits in the past are filing today."

For years, patents have been a way of life for technology companies, which amassed them as a defense against competitors. There have been eras of heavy litigation such as during the early personal computer years and occasional clashes of behemoths such as Intel vs. AMD.

But in most cases, corporations have been content to avoid using their patents in draining battles that can stretch for years. Apple, for example, hasn't filed a major patent suit in many years.

But the rise of smart phones has touched off a new land rush as companies jockey for position. Before Apple sued HTC, Nokia sued Apple in October, prompting a countersuit from Apple. Apple was also sued last year for its multitouch technology by a Taiwanese firm. Kodak sued Apple and BlackBerry-maker Research in Motion in January for camera phone patents.

"It's economics. There's a ton of money flowing into the mobile space; it's the new platform," said Jason Schultz, director of the Samuelson Law, Technology & Public Policy Clinic at UC Berkeley. "Laptops, many think, are a thing of the past. Anytime you have a platform shift, you're going to have a lot of lawsuits over who owns the platform."

Schultz said previous cell phone patent suits have focused largely on hardware. But with smart phones evolving with sophisticated operating systems, companies are finding a whole new set of patents to tap.

In Apple's case against HTC, 14 of the patents deal with user interface and six are concerned with the lower-level operating system.

Protecting their turf

Clement Roberts, a founding law partner at Durie Tangri, said companies seem to be turning to patents to protect their territory and keep competitors on their toes. In the case of Apple, he said the company is probably singling out HTC to eliminate a more vulnerable competitor but also give the industry pause as it tries to follow in Apple's footsteps.

"If you just cause everyone in the industry to become aware of eight to 10 patents and everyone has to design around them, you lengthen the product (development) time frame for everyone else," Roberts said. "That can have an enormous indirect benefit to Apple and you can earn back the cost of the litigation tenfold."

Apple may extend the fight to other smart phone companies and could spark a legal clash with Google. Many believe the HTC suit is aimed at Google, whose Android operating system sits at the heart of most of the phones cited by Apple.

Google has expressed public support for HTC but could be drawn into a larger battle if Apple's legal success imperils Android, said Andrew Torrance, a professor of law at the University of Kansas.

'Google might step in'

"Google, which has a huge interest in the success of Android, might have to step in," Torrance said. "If it looks like a Goliath vs. David fight, Google might step in to even it up."

But even if Apple limits its case to HTC, other observers believe the economy could also prompt a new round of patent suits. Roberts said lean times cause many companies to look at their patents as revenue drivers, rather than defensive tools.

Matthew Powers, head of the litigation department at Weil, Gotshal & Manges, said companies are growing weary of the costs of maintaining patents and are looking to extract more money from them.

He said many companies own thousands of patents, which can cost several hundred dollars a year each to maintain through the U.S. Patent and Trademark Office. He is seeing more companies looking for ways to expand licensing deals or sell their patents to patent aggregators.

"There is a huge amount of money at stake," Powers said.

Consumers could feel the sting of these patent battles if they end in injunctions barring the sale of certain devices. Apple has filed its case in federal court and with the International Trade Commission, which could bar the importation of HTC devices if Apple wins.

Many companies have come to look at patents as a tax on innovation that stifles the kind of incremental improvements that can push an industry forward. Roberts said patent fights can often have a "retarding effect" on innovation that is especially pronounced in fast-growing areas.

Encourage innovation

But Andre, the partner at King & Spaulding, said patents can encourage innovation because the protections provided give companies incentives to spend on development.

Patent lawsuits could also spur innovation if companies look to work around each other's patents and deliver new creative approaches.

Torrance said the mobile field reminds him of the early days of computer software, when companies tested each other before settling into a detente. He said the smart phone companies will eventually put their patents away but not before some more fireworks.

"I think patent litigation in the smart phone realm is growing like bacteria," he said. "It will take a while to work itself out."